Modular methods of construction (“MMC”), following extensive government grant and support is now a serious growth industry, where out of the 200,000 homes built each year, 15,000 are now at least partly MMC.
Some say that it could be one of the solutions to the housing crisis and the 300,000 target, and housebuilders are now entering the market, despite, at the present time, MMC costing about 12% more than traditional builds, but is cost a short term issue bearing in mind potential gains following long term investment?
The advertised benefits of MMC are well rehearsed, here are five reasons for housebuilders to get involved:
- With ageing construction workers and indeed a shortage of labour altogether following Brexit uncertainty, MMC needs a far smaller workforce. Housebuilders will benefit from reduced labour costs, (post Brexit), and new roles can be found in this growth industry. Ilke Homes, MMC manufacturers, employ 800 and are training apprentices, looking to build 2,000 homes a year with car-assembly methods and Homes England funding of £30m.
- It is eco-friendly compared to traditional build – MMC has a reduced carbon footprint. Whilst Minimum Energy Efficiency Standards are being revised and Building Regulations are being reviewed in the light of greater public awareness of sustainability issues, MMC has an inherent advantage. There is capacity to make energy savings, which will become an issue in the 21st century with statutory government greenhouse targets, and would be advantageous for the end purchasers and assist in marketing .
- MMC is now a prominent feature of housing destined for local authorities, who have no homebuilding experience now that borrowing caps have been lifted and they are free to build again. They are entering into Joint Ventures (JVs) with RP developers. Housebuilders could also go down the JV route with local authorities who have a government fund earmarked for housing, (the Public Works Loan Board).
- Moreover, Local Planning Authorities are now requiring at least some element of MMC in planning permissions and the government have now appointed Mark Farmer, the guru of MMC after his report “Modernise or Die”, as a MMC tsar to oversee MMC integration in the housing sector .
- Housebuilders have a unique opportunity to work in partnership with RPs and other socially minded entities to embrace MMC. The larger RPs have entered into JV’s with housebuilders, and perhaps there is some synergy in using MMC methods with RPs, who are actively seeking to tick the government’s MMC boxes. Grant may also be available by joining forces with RPs, and private funders are looking carefully at funding MMC.
Progress in this sector is being made. NHBC warranties are now available for MMC properties as well as BOPAS assurance (Build Offsite Property Assurance Scheme). Barratt Homes are building 10% of their homes in factories and they want to reach 20% by 2020. Berkeley Group have a factory at Ebbsfleet, Kent, and are looking to build 1,000 units a year. Countryside Homes have a factory at Warrington, whilst Crest Nicholson are building 10% of their housing in MMC factories. Galliford Try are building 56 MMC homes in Southampton, whilst Persimmon have a factory, Space 4, in Birmingham. Redrow are using elements of MMC, like smart roofs and garages, whilst Taylor Wimpey plans to build prototypes for future building projects.
The signs are encouraging, and with demand in both the private residential sector and affordable housing sector, will MMC provide the homes of the future?